clicker
there are some times when retracting the flaps would help you climb...indeed on the older 737 if you lose an engine while making an approach, going to a reduced flap setting is one of the things you do...
HOWEVER
if you retract flaps and there is no or little margin between your current airspeed (really angle of attack) and STALL, BAM you stall.
in this case, with the information presented, unless the crew could have gotten additional thrust from number 3 engine, it might have been better to land short of the runway NOTstalled, than to try to "stretch" the approach to the runway and STALL.